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IAS 16 depreciation

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    • July 27, 2020 at 7:28 am #578147
      IAS 16 depreciation 2Divyasri
      Participant

      Hi Tutor,
      Question 3 form chapter 5 of open tuition material:
      PPE bought on 1 Jan 2012 for 25 million
      Useful life – 10 yrs
      On Dec 2014 remaining life was estimated as 5 years.
      Ans:SFP- 14000 and SPL- 3500
      Excess depreciation-
      2500( calculated using previous fig)
      (3500)
      ———–
      1000- will this amount be deducted from retained earnings and 2500 will be charged to SPl, or entire amount will be charged to (3500) SPL
      Thanks

    • July 27, 2020 at 8:09 pm #578330
      IAS 16 depreciation 3P2-D2
      Keymaster

      Hi,

      The 3,500 is charged in full through profit or loss. The 1,000 is a reserve transfer through the statement of changes in equity that will reduce the retained earnings.

      Thanks

    • July 28, 2020 at 5:41 am #578438
      IAS 16 depreciation 2Divyasri
      Participant

      Thanks for your reply tutor,

      Dr Depreciation. 3500
      Cr Accumulated depreciation (SPL) 3500

      Dr Revaluation reserve 1000
      Cr Retained earnings. 1000

      Is this entry right?

      Also in open tuition material answer ,
      in SFP only PPE – 14000 is shown
      Should we also mention
      Retained earnings- 1000(in SFP)

    • August 1, 2020 at 7:28 am #578883
      IAS 16 depreciation 3P2-D2
      Keymaster

      You’re welcome. Yes, your double entries are correct, however I’d not show the figure you state in the SFP extract. There is too much happening in retained earnings to show the figure.

    • August 1, 2020 at 5:19 pm #578925
      IAS 16 depreciation 2Divyasri
      Participant

      Thank you tutor

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